The growth of ecommerce has opened up numerous opportunities for individuals to start their own online businesses. However, with a variety of online retailing business models available, it can be challenging to determine which model is the best choice.
In this article, we will explore the top online retailing business models based on their popularity and key ecommerce metrics.
Which are the best online business models in 2023?
- Manufacturing:
- Manufacturing is the most popular online business model among ecommerce merchants.
- Over 40.5% of online businesses sell products they manufacture themselves.
- The popularity of this model has nearly doubled since 2017, attributed to differentiation through branding and storytelling.
- Hybrid:
- The hybrid model is the second-best online retailing business model, accounting for 19.7% of businesses.
- This model combines elements of manufacturing and reselling or private labeling.
- Private Label:
- Private label businesses make up 18% of the market share.
- These businesses create their own branded products by partnering with manufacturers.
- Reselling:
- Reselling is the fourth-ranked online business model, representing 10.7% of businesses.
- Resellers purchase products from suppliers and sell them to customers without manufacturing or branding.
- Dropshipping:
- Dropshipping completes the top five business models, accounting for 9.3% of businesses.
- Dropshippers do not hold inventory but instead, fulfill orders through a third-party supplier.
Online Retailing Business Models’ Metrics
- Revenue Growth:
- Manufacturing businesses experienced the highest revenue growth, with a 53.4% increase.
- Hybrid, private label, reselling, and dropshipping followed with growth rates ranging from 33% to 45%.
- Income Growth:
- Manufacturing businesses also outperformed other models in income growth, with an 18.2% increase.
- The hybrid model saw a 14.3% income growth, while other models had lower growth rates.
- Conversion Rate:
- Manufacturing businesses have the highest average conversion rate at 2.91%.
- Private label, hybrid, reselling, and dropshipping follow with conversion rates ranging from 1.98% to 2.45%.
Among online retailing business models, manufacturing stands out as the most popular and successful choice. Manufacturing businesses benefit from higher revenue and income growth, as well as superior conversion rates.
However, hybrid, private label, reselling, and dropshipping models also have their merits and can be successful depending on the specific business and market. Entrepreneurs should carefully consider their goals, resources, and target audience when selecting the best online business model for their ecommerce venture.
